The EU approved an 85 billion euro rescue for Ireland on Sunday (28 November) and outlined a permanent system to resolve Europe’s debt crisis, but market pressure is expected to return soon on most indebted nations such as Spain and Portugal.

Policy conditions attached to the loan, which includes a 15-billion-euro austerity plan, will be formally endorsed by EU finance ministers on 6-7 December.

“This agreement is necessary for our country and our people. The final agreed programme represents the best available deal for Ireland,” Irish Prime Minister Brian Cowen said.

Some 35 billion euros was earmarked to help restructure shattered Irish banks, of which 10 billion will be an immediate capital injection and the rest a contingency fund. Ireland will contribute 17.5 billion euros of its own cash and pension reserves towards the bank rescue.

The rest of the emergency loans will help cover the giant hole the banks have blown in public finances. The IMF will contribute 22.5 billion euros.

The United Kingdom, Sweden and Denmark have also made pledges for bilateral loans to complete the package (see complete breakdown here).

This means that the extent of the external assistance will be reduced to €67½ billion, the Irish government said in a statement.

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